Grayscale said in a report that the current crypto winter could last another 250 days, based on previous market cycles.
According to Grayscale’s “Bear Market in Outlook” reportThe life expectancy of the crypto market cycle is 4 years (1275 days), and the bare market begins when the realized price falls below the market price (the current transaction price of the asset).
The grayscale realization price calculation is the sum of all assets at the purchase price divided by the market capitalization of the assets, which allows you to measure the number of profit or loss positions.
Based on the above, the investment company said that it realized that Bitcoin (BTC) was below the market price on June 13, suggesting the start of the bare market.
Leverage has grown in the current cycle
Grayscale writes that the current “crypto market cycle is a story of leverage.”
According to Grayscale, after the pandemic, investors began to take advantage of trade after the government increased spending to support the collapsing world economy.
The company continued to hold a long Bitcoin position in 2021 for more than six months as investors became more and more interested in paying huge fees to maintain their position.
But when collateral prices began to plummet, it stopped abruptly.
The same scenario was recently run as the lack of transparency in the centralized DeFi business involved in leverage was exacerbated by the collapse of Terra’s ecosystem and the short depeg of Ethereum (ETH) bet.
Bitcoin continues to work as designed
The value of Bitcoin can fluctuate significantly in current market conditions, but the network continues to operate as intended.
The network is on track to process $ 18 trillion transactions this year, up from the $ 13 trillion recorded in 2021, according to Grayscale.
Along with other crypto assets for remittances, asset use continues to grow despite poor market conditions.
According to Grayscale, Mexico-based cryptocurrency exchange Bitso quadrupled cross-border remittances between the first quarter of 2021 and the first quarter of 2022.
DeFi
Grayscale said the decentralized finance (DeFi) space was an interesting year as lenders were forced to repay their loans before shareholders and other centralized lenders to avoid liquidity. Said.
Despite capital outflows due to user deleveraging of positions, total borrowing of lending platforms such as Aave and MakerDAO remains higher than in early 2022.
In addition, the liquidity of stablecoin paid on decentralized exchanges such as Uniswap (UNI) was five times that of Binance, the largest centralized cryptocurrency exchange in terms of trading volume.
